Internship Report

On
SME Banking Activities of Bank Asia Limited

Prepared by:
Md. Minhaj Uddin
ID: 18306097
Session: 2017-18
Program: BBA
Major: Banking and Insurance
University of Chittagong

A report submitted in partial fulfillment of the requirement of the degree of Bachelor of

Business Administration (BBA)

Date of Submission: 17th July 2023

 Internship Report
On
SME Banking Activities of Bank Asia Limited

Submitted to:
Mohammad Rifat Rahman
Assistant Professor
Department of Banking and Insurance
University of Chittagong

Submitted by:
Md. Minhaj Uddin
ID: 18306097
Session: 2017-18
Program: BBA
Major: Banking and Insurance
University of Chittagong

A report submitted in partial fulfillment of the requirement of the degree of Bachelor of

Business Administration (BBA)

Date of Submission: 17th July 2023

 Letter of Transmittal

July 17, 2023

Mohammad Rifat Rahman

Assistant Professor
Department of Banking and Insurance
University of Chittagong, Chittagong

Subject: Submission of Internship Report on ‘SME Banking Activities Of Bank Asia

Limited’.

Dear Sir,

With great Pleasure to submit the Internship report entitled on the topic “SME Banking
Activities of Bank Asia Limited”. I have conducted my internship program in Bank Asia
Limited, Oxygen Moor Branch, Chittagong and effect from the 2 (two) months
internship with your supervision. Knowledge gathered from my working experience and
also did some research according to your instructions.
Working experience in the Bank Asia Limited of Oxygen Moor Branch was certainly helpful
to enlighten me with the career in banking sector and it gave me some prior knowledge of
business world and organization culture which will hopefully be helpful in my future career
and also be enough informative to prepare this report.
I would like to thank you and express my gratitude to you for your guidance and support. It
has been a wonderful experience to work on this report under your supervision. This is my
humble request to you to accept this report and I will be pleased to answer any short of query
in case you need any assistance in interpreting my analysis.

Sincerely yours,

(Md. Minhaj Uddin)

ID NO: 18306097
Session: 2017-2018
Program: BBA
Department of Banking and Insurance,
Faculty of Business Administration
University of Chittagong, Chittagong

Page| i
 To whom it may concern

This is to certify that Md. Minhaj Uddin is a student of BBA, ID 18306097

successfully completed his “Internship Program” entitled “SME Banking Activities of
BANK ASIA Limited.” under my supervision as the partial fulfillment for the award of
BBA degree.

He has done his job according to my supervision and guidance. He has tried his best to do
this successfully. I think this program will help him in the future to build up his career. I wish
him success and prosperity.

(Mohammad Rifat Rahman)

Assistant Professor
Department of Banking and Insurance
University of Chittagong, Chittagong

Page| ii
 Acknowledgement

First and foremost of all, I would like to convey my heartiest gratitude and total devotion to
almighty Allah or blessing me with the ability, strength and patience as well as keeping me
active in performing my internship task successfully. It gives me immense pleasure to thank a
large number of individuals or their cordial cooperation and encouragement who have
contributed directly or indirectly in preparing this report. Firstly I express my gratefulness
to Almighty who has enabled me to pursue my study.

I would like to thanks from the core of my heart to my honorable supervisor Mohammad
Rifat Rahman, Assistant Professor, Department of Banking and Insurance, University of
Chittagong for his help in every steps of my internship ,proper instructions, suggestion
and evaluations, which helped me to generate the report in the proper way.

I would like express my heartiest gratitude to Mr. Md. Shawkat Osman (FAVP and
Head of this Branch), Tushar Das (SEO), Zahirul Islam (SO), Marjana Kamrun
Chowdhury (SO & GB In -Charge), Samira Nur (MTO), Shoumen Barua (Officer)
For their intimate care and Supervision. I practically work with them and in this report tried
to share their perceptions and feelings on the basis of my realization from my own point of
view.

Then at last I shall be grateful to those persons who read this report and who shall get benefit
from this report at present and future.

Page| iii
 Executive Summary

The concept of the "Small and Medium Enterprise" (SME) business structure arose with the
goal of reducing poverty, creating jobs, and subsequently increasing economic growth. SME
refers to persons who desire to start their own firm with limited resources. It is simple to
finance, plan, and start. It benefits both the individual and the entire economy.

Our primary goal is to explore SME Banking, often known as SME Finance. Commercial
banks provide the majority of SME funding and invest a sizable amount in SME. For the
development and promotion of SME, they have developed a number of intriguing initiatives
and programs, including self-help, agro-based supervisory industrial credit, enterprise
development projects, etc. Nonetheless, private sector banks have made just a small
investment in financing SME in Bangladesh. It is the most alluring business structure found
abroad. Alibaba, YouTube, and Google purchase their ideas and produce items based on the
concept of SME. Nonetheless, there are more large and medium-sized businesses being used
in our nation.

This report aims to identify the contribution of banks in the development of the SME sector
in Bangladesh. Bangladesh Bank has set guidelines regarding SME financing and has
launched programs such as 'Dedicated Desk' for SME and 'SME Service Centre' for women
entrepreneurs. It has also opened a new department named 'SME and Special Programs
Department' to support SME. The report presents the current scenario of SME in Bangladesh
and the contribution of Central in this case. It also analyzes the nature of credit SMEs
preferred, duration of credit, state of collateral of SME credit and why banks want for the
collateral for SME.

Even though the contribution of SME to bank profit maximization affects the expansion of
our economy generally, banks are still hesitant to lend to SME. Of course, there are some
very important reasons for this bank mentality, and we have also examined those. We have
learned a great deal about SME during the report preparation process. Here, we have also
attempted to offer some suggestions for enhancing the current SME conditions in our nation.
Bangladesh has a lot of potential to grow and enhance its economy through SME
development and being a good citizen. We cannot let these chances pass us by.

Page| iv
 Table of Contents
Cover Page
Title Page
Letter of Transmittal i
To Whom It May Concern ii
Acknowledgement iii
Executive Summary iv
Abstract v-vii

Chapter Contents Page

number

1 Introduction

1.1 Introduction 2
1.2 Scope of the Study 2
1.3 Origin of the Study 2
1.4 Objectives of the Study 3
1.5 Methodology of the Study 3
1.5.1 Sources of data 3
1.5.2 Sampling 4
1.6 Limitation of the Study 4

2 Theoretical Background

2.1 Definition of SME according to Bangladesh Bank 6

2.2 SME Finance in Bangladesh 6
2.3 Industry Policy of SMEs 7

3 Overview of Bank Asia

3.1 History of BANK ASIA LIMITED 11

3.2 Corporate Information 11
3.3 Mission statement 13
3.4 Vision statement 13
3.5 Slogan 14
3.6 Core Values 14
3.7 Strategies of Bank Asia limited 14
3.8 Products & services of Bank Asia Limited 15
3.9 DuPont Analysis 5 Factors Model 18
3.10 Five years balance sheet of Bank Asia Limited 19
3.11 Organizational (General) Hierarchy of Bank Asia Ltd 20

Page| v
 3.12 Overview of Oxygen Moor Branch of Bank Asia Limited 21

4 Study on SME Banking

4.1 SME Banking Activities of Bank Asia Limited 23

4.2 Guideline regarding SME credit policy & programs of Bank 23
Asia
4.3 Demand creation 24
4.4 Market segmentation 25
4.5 Target customer 25
4.6 Place (distribution) 26
4.7 Sector Wise Allocation of Loan and Advances 26
4.8 SME loan processing 29
4.9 Sector wise outstanding loan amount 29
4.10 Disbursement of SME loan 30
4.11 SME loans recovery rate 31
4.12 Amount of SME financing in different sector 31
4.13 Present Scenario of SMEs in Bangladesh 32
4.14 Sector Wise Contribution of SME in GDP of Bangladesh 32

5 Findings & Analysis

5.1 SWOT analysis 34

5.2 Findings 36

6 Problems & Suggestions 38

7 Conclusion 40

Abbreviation 41
References 42
Internship Certificate 43

Page| vi
SME Banking Activities of Bank Asia Limited

Page| vii
 CHAPTER-1
INTRODUCTION

Page| 1
1.1 Introduction
Bank plays vital role in economic development. It collects the public savings from various
sector of a country. It forms the capital accumulation that provides the credit to the different
sector of the economy. It inverses the production, employment generation and livings
standard. The economic growth depends almost on the financial sectors of economy.
Commercial banks are the most important savings, mobilize institutions. Consequently, these
roles make them an important phenomenon in economic growth and development. In
performing these role, it must be realized that banks have the potential scope and prospects
for mobilizing financial resource and allocating them to productive investments. Therefore,
no matter the source of the generation of income or the economic policies of the country,
commercial banks would be interested in giving out loans and advances to their numerous
customers bearing in mind the three principles guiding their operation which are profitability,
liquidity and solvency.

This SME Loan Study is prepared as a consequence of a two-month internship at Bank Asia
Limited's Oxygen Moor Branch for the University of Chittagong BBA program. The advent
of modern banking is triggered by evolving economic practices and societal conventions.
Banking requirements are more varied and complex than ever as we approach a new
millennium. A new player in Bangladesh's private banking industry, Bank Asia Ltd., has
made a promise to efficiently and satisfactorily service all customer needs. Bank Asia Ltd.
commenced operations on November 27, 1999, with its corporate branch situated in Rangs
Bhaban in Dhaka.

1.2 Scope of the Study

This report addresses credit policies and principles of SME Financing of Bank Asia (BA). It
focuses on the credit products accessible for the SMEs, rules followed by the bank in
processing loans, distinct constraints in SME financing, challenges faced by the SMEs in
taking the loans.

1.3 Origin of the Study

This study is explained as an academic prerequisite of BBA Program University of
Chittaging, Chittagong, Bangladesh. After completion of the program term a student must

Page| 2
submit the report on the given topic to the Supervisor. Two months internship program is
necessary for all the students to complete their whole B.B.A. With the partial fulfillment of
the course requirement I was assigned to Bank Asia Limited, Oxygen Moor Branch,
Chittagong.

1.4 Objectives of the Study

The objective of the study is to assess the Bank Asia Ltd.'s SME Loan performance. To
accomplish this, followings objectives have been covered:

 To follow the policies and procedures of Bank Asia Ltd.'s SME loan division.
 To evaluate Bank Asia's performance with regard to SME loans, as well as the
difficulties it encounters in handling SME loan requests.
 Due to the volume of clients they have in this area, it is important to understand more
about the Shamadhan Trading, Shubidha (unsecured), Sristi (unsecured), and Sondhi
(secured) - SME loans of Bank Asia's Oxygen Moor Branch.

1.5 Methodology of the Study

1.5.1 Sources of data:
There are many different sorts of data that may be gathered in a variety of methods, but the
right data is essential for the right research. Primary data and Secondary data have been used
to make the report more rich and informative.

 Primary Sources of Data:

 Consultation with different levels of executives and officers of Bank Asia Limited.
 By interacting with customers over telephone, which was assigned by the Bank Asia
Limited.

 Secondary Sources of Data:

The secondary data are collected from Internet, different article published in the journals and
magazines. Secondary sources are:

Page| 3
  Annual Report of Bank Asia Limited.
 Business Conference Report of the Bank.
 Prior Research Report on various Banks
 Official website Bank Asia Limited.
 Product or service brochure.
 Different Bank Records.
 Many circular published by Bangladesh Bank.
 Unpublished data receive from the branch.
 Relevant books, journals, Periodicals, Research Paper & others.

1.5.2 Sampling:
Sampling is a process used in statistical analysis in which a predetermined number of
observations will be taken from a larger population. Convenience sampling has been used for
this research.

1.6 Limitation of the Study

The inadequate and scarce supply of necessary data was the main issue encountered in
writing the study. This report provides a broad overview of Bank Asia Limited's credit
operations. The report might not be up to par due to several limitations.. The problems that
were faced while preparing the report are as follows:

 I was placed to this department for only 08 weeks of time and working like a regular
employee hindered the opportunity to put the better effort for the study.
 Some information was withheld to retain the confidentiality of the bank.
 Due to the desk assignment and heavy work load it is almost difficult to collect
information from the different sources other than my bank. .
 Difficulty in accessing latest data of internal operations.
 The bankers are very busy with their jobs, which lead a little time to consult with
them.

Page| 4
 CHAPTER- 2
THEORETICAL BACKGROUND

Page| 5
2.1 Definition of SME according to Bangladesh Bank
SME (Small and Medium Enterprise) loans are credit facilities given to businesses in
Bangladesh that fit the definition of a SME as set forth by the Bangladesh Bank. SMEs are
companies with total assets valued up to BDT 50 million (about USD 590,000), excluding
land and buildings.

SME loans have been created to provide financing to businesses with limited access to credit,
especially those in the SME sector, which is occasionally seen to have riskier borrowers than
larger enterprises. Working capital, equipment acquisitions, inventory management, business
expansion, and other expenses directly related to operations are typical reasons for SME
loans.

In Bangladesh, banks and other financial institutions are required to provide at least 5% of
their total loan portfolio to SME lending. The Bangladesh Bank has also launched several
programmes to support SME financing, including collateral-free loans for SMEs up to BDT
2.5 million (roughly USD 29,000), a special refinancing programme for banks and other
financial institutions to offer credit facilities to SMEs at lower interest rates, and a credit
guarantee programme to provide collateral support to SMEs.

In Bangladesh, SME loans typically have an annual interest rate cap of 9% and a maximum
loan period of 5 years. The terms and conditions of SME loans may vary depending on the
lender, the borrower's creditworthiness, the loan amount, and other factors.

2.2 SME Finance in Bangladesh

The Bangladesh Bank, the monetary authority of the nation, is principally in charge of
enforcing the laws and regulations pertaining to SME financing in Bangladesh. To guarantee
that SMEs have prompt and effective access to financing and credit facilities, the Bangladesh
Bank has released a number of recommendations and circulars.

According to the Bangladesh Bank, the following are some of the main guidelines and laws
pertaining to SME financing:

 Mandatory SME Financing: SME funding is required in Bangladesh, where banks

and other financial institutions must set aside at least 5% of their total loan portfolio
for this purpose.

Page| 6
  Collateral-free loans: Up to BDT 2.5 million (about USD 29,000), banks must offer
collateral-free loans to SMEs. For female businesses, the collateral-free loan cap
could be raised to BDT 10 million (about USD 118,000).
 Special Refinance Scheme: In order to encourage banks and other financial
institutions to offer credit facilities to SMEs at lower interest rates, Bangladesh Bank
has launched a unique refinance scheme.
 Credit Guarantee Scheme: To offer collateral support to SMEs, Bangladesh Bank
has additionally established a credit guarantee scheme. This programme allows SMEs
to get loans with a guarantee covering up to 90% of the loan amount.
 Loan Tenure: For SMEs, banks are required to provide loans with a maximum term
of five years.
 Interest Rate: The interest rate for SME loans is fixed at a maximum of 9% per
annum.

2.3 Industry Policy of SMEs

The SME (Small and Medium Enterprise) sector is regarded as one of the major generators of
economic expansion and employment creation in Bangladesh. The Bangladesh Bank, the
country's central bank, has established a number of policies and measures to encourage and
assist the growth of the SME sector. According to the Bangladesh Bank, some of the
important SME industry policies include:

 Cluster-based approach: To encourage the growth of SMEs, the Bangladesh Bank

has devised a cluster-based strategy. This strategy involves locating and assisting
business clusters that are geographically concentrated and share similar traits and
difficulties.

 Technology adoption: The Bangladesh Bank has put in place regulations to

encourage SMEs to modernise their production methods and adopt new technologies.
This involves giving money for training, capacity-building, and the purchase of
technology.

 Access to finance: The Bangladesh Bank has implemented a number of initiatives to

increase SMEs' access to capital, including specific refinance programmes, credit

Page| 7
 guarantee programmes, and mandated SME funding for banks and other financial
institutions.

 Women entrepreneurs: The Bangladesh Bank has implemented policies to help and
encourage women business owners in the SME sector, including credit guarantee
programmes, collateral-free loans up to BDT 10 million (about USD 118,000), and
training and capacity-building activities.

 Export promotion: The Bangladesh Bank has put in place policies to aid SMEs in
the export industry, including financing for export-focused SMEs, giving export credit
guarantees, and assisting market access through trade shows and promotional
activities.

These policies are meant to solve the difficulties experienced by SMEs in Bangladesh and to
encourage the expansion and development of the SME sector.

The definition published by Ministry of Industries and endorsed by Bangladesh Bank of SME
is as follows:

Medium Industry/Enterprise
Total Fixed Assets
Nature of Enterprise Total Employees
(Excluding Land and factory building)
Service Concern Not exceeding to TK.15 Crore Up to 100 person

Trading Concern Not exceeding to TK.15 Crore Up to 100 person

Manufacturing
Not exceeding to TK.30 Crore Up to 250 person
Concern

Page| 8
Small Industry/Enterprise
Total Fixed Assets
Nature of Enterprise Total Employees
(Excluding Land and factory building)
Service Concern Not exceeding to TK.1.00 Crore Up to 25 person

Trading Concern Not exceeding to TK.1.00 Crore Up to 25 person

Manufacturing
Not exceeding to TK.10.00 Crore Up to 99 person
Concern

The European Union (EU) defines SMEs as independent businesses that are not owned and
have up to 25% or more of the voting rights in a single business or a group of businesses.
SME has less than 250 employees and a yearly balance sheet total of no more than 27 million
euros or a turnover of no more than 40 million euros. In 2004, Bangladesh's small and
medium-sized enterprises (SME) produced 25% of the nation's GDP and 80% of its industrial
jobs. The estimated 6 million SMEs and micro enterprises in the nation with fewer than 100
employees contribute significantly to economic growth and employment creation, according
to ADB. This industry has specific requirements and need a specialised approach.

Page| 9
 CHAPTER- 3
OVERVIEW OF BANK ASIA

Page| 10
3.1 History of BANK ASIA LIMITED
A commercial bank was founded by some eminent business people in Bangladesh with the
goal of eradicating poverty in the nation. Bank Asia Limited was the final outcome. The bank
began operating on November 27, 1999, which was the 27th day of the month. The business
people predicted that Bangladesh would place a priority on human rights and dignity in the
future.

A group of eminently successful business people who have established themselves in society
founded Bank Asia. The management of the Bank consists of a team led by senior bankers
with decades of experience in national and international markets. An experienced group of
specialists, many of whom have experience in the worldwide market, supports the senior
management team well.

By acquiring the Bank of Nova Scotia's Dhaka business operations, a first in Bangladeshi
banking history, it established a landmark. By acquiring the Bangladesh business of Muslim
Commercial Bank Ltd. (MCB), a Pakistani bank, it once more replicated the performance.

In the year 2003 the Bank again came to the limelight with over subscription of the Initial
Public Offering of the shares of the Bank, which was a record (55 times) in our capital
market's history and its shares commands respectable premium.

The increase of assets and liabilities has been astounding. Without placing the Bank in
problematic positions, Bank Asia has been aggressively trading in both the domestic and
foreign currency markets. In the backdrop of a policy of gradually declining interest rates, the
Bank's investment in Treasury Bills and other securities increased significantly, creating
prospects for boosting income.

3.2 Corporate Information

(In Million Taka unless otherwise specified)

Financial Information

Authorized Capital 15, 000.00

Paid Up Capital 11,659.07

Reserve Fund & Surplus 16,981.18

Page| 11
 Total Shareholder’s Equity 28,640.25

Earnings Per Share 2.61 tk.

Deposits 337,695.42
Loans and Advances 277,870.36

Export 171,275

Import 210,588

Remittance(Inward) 132,243

Organizational Information

Company Registration No. C38707 (665)/99 on November 27, 1999.

Date of IPO subscription 23/09/2003, 24/09/2003

SWIFT Code ALARBDDH

Bank Asia Tower

32 & 34 Kazi Nazrul Islam Avenue
Registered Office
Karwan Bazar
Dhaka- 1215
Corporate Website http://www.bankasia-bd.com

M/s.Hoda Vasi Chowdhury & Company,

Chartered Accountant
Auditors BTMC Bhaban(7th Floor)
7-9 Karwan Bazar, Dhaka-1215,
Phone: +88(02)9140094, +88(02)9120090
S.F Ahmed & Co.(SFACO)
Chartered Accountant and tax &
Management Consultants
Tax Advisor
House#51(3rd floor)
Road # 9, Block # F
Banani, Dhaka-1213

Page| 12
Chairman, Board of Director Romo Rouf Chowdhury

President & Managing

Areef Billah Adil Chowdhury
Director
No of Directors 16

Branches 135

Sub-Branches 14

Agent Outlet 5414

Shareholders 7583

Own-218, Shared-240 (Q-cash), Cash Link -(125+),

ATMs
Woman Booth-10
SME centers 04

Islamic Windows 05

Off Shore Banking Unit 01

No of Employees 2865
(N.B.:as per Annual Report 2022)

3.3 Mission Statement

 To assist in bringing high quality service to our customers and to participate in the
growth and expansion of our national economy.

 To set high standards of integrity and bring total satisfaction to our clients,
shareholders and employees.

 To become the most sought after bank in the country, rendering technology driven
innovative services by our dedicated team of professionals.

3.4 Vision Statement

Bank Asia's vision is to have a poverty free Bangladesh in course of a generation in the new
millennium, reflecting the national dream. Our vision is to build a society where human
dignity and human rights receive the highest consideration along with reduction of poverty.

Page| 13
3.5 Slogan
The slogan of Bank Asia Limited is “FOR A BETTER TOMORROW’’

3.6 Core Values

 Place customer interest and satisfaction as first priority and provide customized
banking products and services.

 Value addition to the stakeholders through attaining excellence in banking operation.

 Maintain high ethical standard and transparency in dealings.

 Be a compliant institution through adhering to all regulatory requirements.

 Contribute significantly for the betterment of society.

 Ensure higher degree of motivation and dignified working environment for our human
capital and respect optimal work-life balance.

 Committed to protect the environment and go green.

3.7 Strategies of BANK ASIA LIMITED

The strategies that Bank Asia follows are as below:

 To Manage and operate the Bank in the most efficient manner to enhance financial
performance and to control cost of fund.

Page| 14
  To strive for customer satisfaction through quality control and delivery of timely
services.
 To identify customer’s credit other banking needs and monitor their perception
towards our performance in meeting those requirements.
 To review and update policies, procedures and practices to enhance the ability to
extend better services.
 To trail and develop all employees and provide them adequate resources so that
customer’s need can be responsibly addressed.
 To promote organizational effectiveness by openly communication company plans,
policies, practices and procedures to all employees in a timely fashion.
 To cultivate a working environment that fosters positive motivation for improved
performance.
 To diversify portfolio both in the retail and wholesale market.
 To increase direct contact with customers in order to cultivate a close
relationship between the Bank and its customers.

3.8 Products & Services of BANK ASIA LIMITED

Keeping pace up with the Head Office instruction & to fulfilling the perfect needs of the
customers, the Bank Asia provides the following services.

Services of BA:

 ATM Services
 Remittance Service
 Locker Service
 Online Banking
 Internet Banking
 Phone Banking
 Mobile Banking
 SWIFT
 Centralized Trade Services
 Student File
 Travelers Cheque

Page| 15
  E-Commerce
 E-Procurement
 Debit Card
 Contact Center
 Remote Banking (EBEK)
 Agent Banking
 Electronic Fund Transfer (EFT)
 Utility fees payment
 School, College & University fees collection
 Credit Card

Products of BA:
SME Banking
 Deposit product
 Savings Account
 Current Account
 Short Notice Deposit
 Fixed Deposit
 Foreign Currency Account
 Deposit Pension Scheme
 Monthly Benefit Scheme
 Double Benefit Scheme
 Triple Benefit Scheme
 Bank Asia Shonchoy Plus
 Shonchoye Koti Poti
 Anchol (Women)
 Bhromon (Travellers)

 Term Loan
 Subidha - Unsecured Trading

 Sondhi - Secured Trading

 Sristi - Unsecured Manufacturing

Page| 16
  Shombridhi - Secured Manufacturing
 Shofol - Unsecured Service
 Sheba - Secured Service
 Probaho - Unsecured Trading/ Manufacturing

 Special Products
 Utshob - Seasonal Business
 Subarno - Women Entrepreneur

 Over Draft
 Somadhan – Secured

Islamic Banking
 Deposit Products
 Al-Wadiah Current Account(AWCA)
 Mudaraba Savings Account(MSA)
 Mudaraba Special Notice Deposit
 Account(MSNDA)
 Mudaraba Term Deposit Account(MTDA) of different Tenure
 Mudaraba Hajj Savings Scheme(MHSS)
 Mudaraba Deposit Pension Scheme(MDPS)
 Mudaraba Monthly Profit Paying Deposit
 Scheme(MMPPDS)
 Smart Junior Saver(SJS)
 Cash Waqf

 Investment Products
 Bai Murabaha Muajjal
 Hire Purchase Shirkatul Melk(HPSM)
 Musharaka
 Quard against Accepted Bills

Page| 17
3.9 DuPont Analysis 5 Factors Model
DuPont analysis is an approach to decomposing return on equity for better understanding
about which factor contributed to the ROE most and which factor caused the ROE to move.
For broader analysis, we used 5 factors model that covers net profit margin, total asset
turnover and financial leverage. Net profit margin is further broken down to operating profit
margin, effect of non-operating items and tax effects.

Particulars 2022 2021 2020

ROE 10.88% 9.89% 7.81%
Net Profit Margin 8.67% 9.21% 7.24%
Total Asset Turnover 0.0775 0.0694 0.0737
Financial Leverage 16.1919 15.4740 14.6283
Operating Profit 30.43% 31.27% 21.60%
Margin
Effect of Non- 0.6121 0.4794 0.6519
operating items
Tax Effect 0.4653 0.6142 0.5144

Page| 18
3.10 Five Years Balance Sheet of BANK ASIA LIMITED
(In Million Taka unless otherwise specified)

Balance Sheet 2022 2021 2020 2019 2018

Authorized Capital 15,000 15,000 15,000 15,000 15,000

Paid–up Capital 11,659.07 11,659.07 11,659.07 11,659.07 11,103.87

Reserve Fund & Surplus 16,981.18 15697.57 15,721.82 13,086.05 12,236.26

Total Shareholders’ Equity 28,640.25 27,356.64 27,380.90 24,745.12 23,340.13

Deposits 337,695.42 140,899.29 133,489.37 110,061.78 95,131.10

Loans & Advances 277,870.36 262,266.70 244,642.03 227,298.96 214,618.15

Investments 102,849.11 77,021.19 94,251.18 54,932.58 35,999.20

Fixed Assets 5,615.91 5,213.61 5,288.35 4,520.49 4,584.55

Total Assets 468,400.94 438,293.29 408,960.69 353,800.37 307,291.40

Interest Earning Assets 426,187.54 388,166.24 372,489.99 312,059.88 278,695.30

Non-Interest Earning Assets 42,213.40 26,195.56 13,148.46 11,283.26 9,310.81

Page| 19
3.11 Organizational (General) Hierarchy of Bank Asia Ltd

Page| 20
3.12 Overview of Oxygen Moor Branch of BANK ASIA
LIMITED
The study has been completed at Oxygen Moor branch, in front of Sekander centre (1st Floor),
422, Oxygen Moor, Kulgaon, Baizid, Ctg. Which is started on June 24, 2010 with the 09
efficient & responsible employees. There are some efficient and effective bankers workers in
this branch the management of the branch always tries to provide better service to its
customer and behave well with them. As a result they have got a huge number of accounts in.

Bank Name Bank Asia Limited

Branch Name Oxygen More Branch

Address 422 Oxyzen More, Kulgaon, Biazid, Chittagong

Telephone 031 2583701-3

SWIFT Code BALBBDDH

Routing
70155880
Number

District Chittagong

Date of Opening June 24,2010

Bank Type Private Bank

Bank Category Commercial Bank

Bank Origin Local Bank

Bank Website https://www.bankasia-bd.com/

Bank Asia Ltd. (BA) has launched SME Banking in early 2007 with the view in mind to-
 Provide SMEs with easy access to financing.
 Deliver products that ensure superior returns to our customers.

Page| 21
 CHAPTER-4
STUDY ON SME BANKING

Page| 22
4.1 SME Banking Activities of BANK ASIA LIMITED
Bank Asia refers to Sachondo Products as SME Banking as a whole. The items are made for
manufacturing, services, and trading. Both secured and unsecured loans are used in some of
the schemes. You won't have to wait around for money if you own a potential SME. Finance
is offered by Bank Asia in accordance with Bangladesh Bank policies. Obtaining a loan is an
easy and convenient process. Women business owners can borrow money from Bank Asia on
even more lenient terms.

Under the Poverty Alleviation head, Bank Asia has launched another programme to provide
funds for rural residents. Actually, this is a form of SME banking as well. The bank offers
loans for fish farming, poultry businesses, home-based businesses, small engineering shops,
and IT training facilities. This loan is available to young, unemployed people with a relevant
educational background or work experience.

Bank Asia has a plan to get in the field of micro credit through some NGOs. The loan would
be disbursed to groups of land less people and selected NGO would work on behalf of the
bank.

4.2 Guidelines regarding SME credit policy & programs of

BANK ASIA LIMITED
Product Features:
Product Nature Maximum Loan Interest Loan Type
Name Tenor Rate

Subidha Unsecured trading 3 years 9% Equal Monthly

Installment
Sristi Unsecured 3 years 9% Equal Monthly
manufacturing Installment
Sofol Unsecured service 3 years 9% Equal Monthly
Installment
Sondhi secured trading 5 years 9% Equal Monthly
Installment
Sombriddhi secured 5 years 9% Equal Monthly
manufacturing Installment
Seba secured service 5 years 9% Equal Monthly
Installment

Page| 23
Somadhan Trading 1 years 9% Over Draft
Manufacturing
Service
Utshob Seasonal 9 months 9% Single Installment

Subarno Women 3 years 9% Equal Monthly

entrepreneur Installment

4.3 DEMAND CREATION

The SME division of Bank Asia Limited basically provides micro credit loans to small and
medium enterprises. The process flow of demand creation is as follows:

Aside from market research and product development, the loan officers are essential at every
stage of demand creation. In addition to serving customers door to door, they are always
looking for new customers. Because customers are unaware of the financial products that
could meet their needs, loan officers must first discover their needs, assess their requirements,
and then choose the products that are most suited to each customer.

Customer Needs
Market Identification Identification

Product Development

Relationship Building Awareness

The primary method of security for SME products is the development of relationships
between customers and banks. The two main sources of demand are new and recurring

Page| 24
clients. Bank Asia Limited cannot afford to lose customers because banks are dealing with
new marketing realities including changing demographics, a slow-growing economy, more
savvy competition, etc. Superior value and satisfaction are the major factors in client
retention. Repeat borrowers of SME products receive several additional benefits, since Bank
Asia Limited is aware of this fact.

4.4 MARKET SEGMENTATION

Within SME, the market is further segmented on the basis of the nature of the business as
follows:

4.5 TARGET CUSTOMER

Organisations must be able to retain their clients by providing higher value if they want to
succeed in today's cutthroat market. An organisation must be able to pinpoint the clients who
would profit from its items in order to accomplish this. The target market for Bank Asia's
SME products is small and medium-sized businesses with modest borrowing needs. However,
Bank Asia Limited does not provide funding for new companies. To be eligible for the SME

Page| 25
credit programmes provided by BANK ASIA, the company must be open for business for at
least two years. These companies tend to be sole proprietorships. There are also some
partnerships, however it's uncommon to see limited businesses in this group. The survey I
had conducted yielded the following findings as common characteristics of the respondents.

4.6 PLACE (DISTRIBUTION)

BANK ASIA LIMITED offers loans to SME clients around the nation. However, the SME
Division of the Asset Operations Department handles all loan processing centrally. The unit
office serves as the fundamental building block of the SME Department's distribution system.
Each unit office has 2–7 CROs, depending on the market potential of that specific unit. The
CROs are in charge of distributing SME loans locally. Almost 1050 Corvettes are at present
on the road in the nation.

4.7 Sector Wise Allocation of Loan and Advances

Car Over SOD Term Hous Consume SME Woman Total
loan Draft Loan e r loan entrepr
Loan eneur
2019
5% 18% 11% 30% 4% 12% 10% 10% 100%
2020
7% 1% 4% 31% 32% 1% 17% 7% 100%
%
2021 !00%
5% 17% 18% 24% 4% 18% 8% 6%
2022 100%
4% 12% 5% 18% 4% 1% 32% 24%

Page| 26
Analysis: Here in 2019 Bank Asia had given highest amount of loans to Term loan and Over
draft and lowest amount of loans to car loan and house loan.

Analysis: Here in 2020 Bank Asia had given highest amount of loans to house Loan and
Term loan and lowest amount of loans to SOD and Overdraft.

Page| 27
Analysis: Here in 2021 Bank Asia gave highest amount of loans to Consumer loan, SOD,
Term Loan and lowest amount of loans to SME, Car Loan, Women Entrepreneur.

Analysis: Here in 2022 Bank Asia give highest loan to SME and Women Entrepreneur and
lowest loan to Consumer Loan and House Loan.

Page| 28
4.8 SME Loan processing
According to the previous records, SME loan for small enterprise was 41% and medium
enterprise was 59% in 2019. In 2020 SME loan for small enterprise was 45% and medium
enterprise was 55%. In 2021, SME loan for small enterprise was 52% and medium enterprise
was 48%. Finally, SME loan for small enterprise was 55% and medium enterprise was 45%
in 2022.

As per information it can be said that Small Enterprises are taking more SME loans then
medium enterprise.

4.9 Sectors Wise Outstanding Loan Amount

After carefully analyzing sector wise outstanding loan amount, it’s clear that Finance,
Insurance & Fixed asset has the highest outstanding loan amount which is 18% and Mine has
the lowest outstanding loan amount of 0%, out of total loan amount.

Page| 29
4.10 Disbursement of SME Loan
Disbursements under loan facilities are only be made when all security
documentation is in place. CIB report should reflect/include the name of all the lenders with
facility, limit and outstanding. All formalities regarding large loans and loans to Directors
should be guided by Bangladesh Bank circulars & related section of Banking Companies Act.
All Credit Approval terms have been met.

Page| 30
4.11 SME Loans Recovery Rate

4.12 Amount of SME financing in different Sector

Page| 31
4.13 Present Scenario of SMEs in Bangladesh

4.14 Sector Wise Contribution of SME in GDP of Bangladesh

Page| 32
 CHAPTER- 5
FINDINGS & ANALYSIS

Page| 33
5.1 SWOT Analysis

Strengths:

 Security Compliance and Protection against Cyber Threats: successfully

implemented HCI (Hyper Convergence Infrastructure) for the Visualization
Application Platform, conducted training on the ISO/IEC 27001:2013 Lead
Auditor program, and achieved an ISO/IEC 27001:2013 surveillance audit.
 Maintained a strong capital base: one of the highest CRARs (17.70%) in the
banking industry.
 Stable entity credit rating over the last 6 years: Long Term: AA2, Short Term:
ST-2
 Enhancement of brand image: winner of four prestigious national and five
international awards.
 Financial inclusion: Pioneer in the inclusion of grassroots-level people through
Agent Banking, Post Office Banking, the Social Safety Network, ABAK, and
others.
 Robust distribution channel to provide nationwide coverage: Bank Asia's
network has over 5 million customers. 135 branches, 5414 agent banks, 56,500+
micro merchants, and 209,382 post office banking accounts
 Inward Remittance Growth: Wide Distribution Channels and Networks with
Exchange houses were able to attract inward remittance worth USD 1,494 million
in 2022.
 Enrichment of Human Capital: provided virtual training and workshops to
2807 participants who received 60,984 man-hours training.
 Awareness Creation: A sustainable business framework is created by creating
value for stakeholders complying with environmental issues and published reports
articles in this regard.
 Cost-to-income ratio: decreased from 54% in 2021 to 51% in 2022.
 Remarkable growth in after-tax profit: 33% growth versus the previous year.

Page| 34
Weaknesses

 Technological Innovation Awareness: Put integrated vision, technological

innovation awareness, and behavior-driven programs together.
 Alternative Income Avenues: dependence on industry culture, which requires a lot
of time and R&D to introduce new income avenues.
 Asset Management: The lack of proper loan and other asset management is one of
the inherent weaknesses of the overall banking industry.
 Business Growth: (Deposits and Advances) falling behind schedule.

Opportunities

 Digital Transformation: Adoption of Digital Banking Solutions

 Stimulus packages for smothering business operations: Increase ADR and IDR to
generate funds.
 Financial inclusion: in the age of marginalized profit for banks, this might be a game
changer where around 1/3 of Bangladeshi households are yet to have access to either
banks or other financial institutions.
 Incorporating unbaked people: Integrate them under our ever-increasing agent
banking network, one of the largest in the country.
 Rebounding of the economy: picking up of the export and import sectors and inward
foreign remittances, alongside resumption of business activities
 Implementation of government mega projects, such as the expansion of Hazrat
Shahjalal International Airport’s third terminal, the BongoBondhu Tunnel, the Dhaka-
Sylhet 4-lane highway, the Dhaka Metro Railway Transaction project, Dhaka to
Cox’s Bazar Railway Lane project etc.
 Increasing money supply in the market: Bangladesh Bank lowered the repo rate
and CRR, which creates more investment opportunities.

Threats

 Global Political Unrest: Rising tension among countries worldwide is likely to cause
an adverse cascading impact on our country’s economic activities.
 Credit Risk: Arises due to the rising trend of NPL levels in the country.

Page| 35
  Rising Inflation: It reached 9.74% in June 2023, a point-to-point increase of 0.59%.
This will put strain on the bank’s bottom line.
 Shrinking profitability: A single-digit interest rate decreases the bank’s earning
potential.
 Cybersecurity: Kaspersky Labs rated Bangladesh as the 3rd most vulnerable country
in terms of not being able to defend against potential cyberattacks.
 Exchange rate risk: fluctuations cause risk in the forex business, especially in import
and export operations.
 Competition: The cost of switching is very low for customers due to the presence of
a large number of peer banks in the country.

5.2 FINDINGS
Positive

 All employees of Bank Asia Ltd., Oxygen Moor Branch, worked in different
branches of Bank Asia Limited. That’s why they are very skilled and experienced.
 The SME Loan system of Bank Asia Ltd. Is monitored and maintained regularly.
Which reduces the chances of classified loan.
 Through SME Loan Recovery Bank Asia Limited reduces its provision on
classified loans every year.
 Bank Asia Ltd. makes loans to clients while adhering to proper procedures and
systems to ensure that loan does not cause problems for the bank or branch.

Negative

 There are no appointed loan recovery officers in the Oxygen Moor branch.
 Bank Asia Ltd. does not work with any third parties for SME Loan recovery
Operation.

Page| 36
 CHAPTER- 6
PROBLEMS & SUGGESTIONS

Page| 37
PROBLEMS
The following problems are found in SME loan section:

1. Bank Asia, Oxygen Moor Branch doesn’t have any specific loan recovery officer
2. Credit in-charge has too much responsibilities on his shoulder.
3. Clients of OD products of this branch lacks proper attention.
4. No recovery unit exist in this branch of Bank Asia
5. High interest rate making potential customer to lose their interest in SME loan.
6. There is no arrangement to attract potential partnership business clients.
7. Loan application and disbursement process takes a lot of time for regular customer in
Oxygen Moor Branch.

SUGGESTIONS

The following suggestions are for the development of SMEs:

1. Appoint additional loan officers: There should be an additional officer in the

Oxygen Moor Branch.
2. Work with an enlisted third party: Bank Asia Ltd. should work with an enlisted
third party for loan recovery.
3. Keep up the performance of OD: Bank Asia should keep up the performance of OD
products.
4. Increasing the number of recovery units: Bank Asia should be more stringent in
their recovery units to ensure 100% recovery.
5. Arrangements should be made to attract partnership business clients: Bank Asia
should increase the facility for partnership businesses so that the clients of partnership
businesses can be motivated to take the loan.
6. Reducing Interest Rate: Bank Asia should reduce the interest rate on SME loans so
that they can attract more customers and become the market leader in SME financing.
7. Loan application and disbursement procedure: Because the SME loan application
and disbursement procedure is complex, Bank Asia should take the necessary steps to
simplify the loan application and disbursement procedure.

Page| 38
CHAPTER- 7
CONCLUSION

Page| 39
 CONCLUSION

It's fascinating to note that the circumstances for small industry growth now, on the cusp of
comprehensive globalization, are quite similar to those witnessed a few decades ago. Despite
the criticism and neglect of the SME sector for its inefficiency and suboptimal use of
productive factors in comparison to larger industries, SMEs are starting to receive praise for
their greater reliance on labor-intensive production techniques, reduced reliance on imported
inputs, and improved geographic dispersion. Commercial banks are quite important and have
a lot of movement in both developed and developing economies. Entrepreneurs are helpless
without sufficient funding because capital is the primary ingredient in modern production.
Both the government and the banks should step up to support the entrepreneurs and deploy
the nation's capital for constructive uses essential to economic progress.

Government funding assistance for these initiatives should be expanded given the issues that
Bangladeshi SMEs are currently facing and those that will arise in the future. The budget
should, however, invest more money for the improvement of administrative, infrastructural,
and other constraints because doing so will increase the production and efficiency of SMEs.
Finally, a comprehensive strategy will be required to remove these barriers to
internationalization.

Page| 40
 ABBREVIATIONS

BAL Bank Asia Limited

BFTN Bangladesh fund Transfer Network

LC Letter of Credit

BG Bank Guarantee

SWIT
Society for Worldwide Interbank Telecommunication
Financial

ALCO Asset Liability Committee

CRM Credit Risk Management

GDP Gross Domestic Production

CRG Credit Risk Grading

ROA Return on Asset

SME Small and Medium Enterprise

ROE Return on Equity

SWOT Strength Weakness Opportunity Threat

RO Relationship Officer

AVP Assistant Vice President

CLR Classified Loan Review Report

CIB Credit Information Bureau

BB Bangladesh Bank

RU Recovery Unit

Page| 41
 REFERENCE
 Alam, M. S. and M. A.Ullah. (2006), “SMEs in Bangladesh and their financing:

 An and Some recommendations.” (8th Ed.), page 52-57

 Ahmed, Momtaz Uddin (1999), Development of small-scale industries in Bangladesh in

the new millennium: Challenges and opportunities, Asian Affairs, Vol. 21(1): 33-41, Jan-

March.

 Abdul Awal Mintoo. (2006). SMEs in Bangladesh, CACCI Journal, and Vol. 1(3): 23-37.

 Cull, Robert, Lance E. Davis, Naomi R. Lamoreaux and Jean-Laurent Rosenthal. (2006),

“Historical financing of small and medium size enterprises”. Journal of Banking and

Finance, 3(1): 57-59.

 S. M Akterujjaman (2010) “Problems and prospects of SMEs loan management”: A

study on Mercantile Bank Limited, Khulna Branch Volume– V, Issue– 02, July-

December.

Others:

 Prospectus of Bank Asia Limited

 Annual report of Bank Asia Limited (2010-2022)
 Product Program Guideline of Bank Asia Products
 Trial balance of Oxygen Moor branch of BANK ASIA.
 Outstanding loan statement of Oxygen Moor branch.

Web:

 www.bankasia-bd.com
 www.bangladesh-bank.org
 http://www.citeman.com
 http://ivythesis.typepad.com
 http://www.asaub.edu.bd
 http://www.dcci.org.bd
 www.investopedia.com

Page| 42
INTERNSHIP CERTIFICATE

Page| 43